I find that question a bit "backwards". Are you thinking of an application and wondering if you can use a VFD without a speed sensor?
Anyhow, a paper machine drive almost certainly cannou work without a speed transducer. Today's specifications say at least 0.05 and usually 0.01 percent speed accuracy. That is something you cannot have without a speed transducer, often an incremental encoder with around 1024 PPR.
A test bench for motors used to run without speed transducers and you could have something like +/- 0.5 percent accuracy from the speed estimator in a VFD. But that is not enough any more. Efficiency needs to measured with at least 0.1 percent accuracy and since the torqu transducer is difficult to get any better, the speed measurement needs to be as good as it can be.
Generally, if you need better than around 0.5 percent accuracy over torque, speed and temperature range, you need a speed transducer.
Some built-in estimators/observers can do better than that if calibrated continuoiusly. But that is usually only in special situations.
The SKF Sensor Bearing is a good alternative to a "real" encoder. It is built into the bearing and is thus very well protected. It is also low cost and can achieve high accuracy if reciprocal speed measurement is used.
Gunnar Englund
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100 % recycled posting: Electrons, ideas, finger-tips have been used over and over again...